While Rupee has been consolidating in the 60.80 – 61.40 range I have been questioning if appreciation beyond 60.50 levels is warranted and should one go long here. Had a couple of points in mind: 1. When rupee had surged past 64 – 65 levels, Indian Exports had become cheaper compared to Chinese exports due to sharp depreciation of the INR. INR has since appreciated 11.25% and CNY has depreciated 3% in 2 months. This basically goes to show that Indian Exports will lose the competitiveness and the natural adjustment process associated with depreciation will be halted if rupee continues to appreciate. Is RBI comfortable with rupee below 60.00 levels when other emerging market currencies are depreciating? 2. Looking at the Fx Reserves - Our FX Reserves are at $ 295.448 bn as on 07 th March 2014 from lows of $ 274.806 bn in Sep 13. The maximum Fx reserves held from data analysed since 2001 is $ 320.785 bn held in Sep 11. Can we say that RBI then can atlea...
The specific focus of the Blog is on Global and Domestic interest rates and currencies market. I look at fundamentals to define my bias and corroborate that with a study of price action to put on high conviction trades. The views and opinions are those of author and author alone. ~ Author: Vaishali Bagchi